The August doldrums passed the New York City office market by, with a historically busy end of summer keeping the city on pace for its busiest year of leasing since 2019.
Paramount Group’s 1301 Sixth Ave., where Piper Sandler signed one of August’s biggest leases at 140K SF.
Roughly 3.7M SF of Manhattan office space was leased last month, 36% higher than the same month in 2024 and over 20% more than in July, according to Colliers. The availability rate fell to 15%, its lowest level since January 2021 and more than 2 percentage points down from a year ago.
The tightening market is pushing tenants to snap up available space and, for the first time in years, commit to space not yet under construction.
The biggest lease signed last quarter was Deloitte’s deal for 807K SF at 70 Hudson Yards, a prelease that was first reported in April but closed this month. Developers Related Cos. and Oxford Properties Group broke ground on the 1.1M SF tower in June and expect it to come online in 2028.
“People always expected the shift to occupiers or tenants becoming comfortable with the idea of being the first to sign in a building that isn’t even built yet to come around,” said Andrew Lim, JLL director of New York office research. “But I think people were not expecting it to come around so quickly.”
Through the first eight months of the year, companies have signed 27.3M SF of leases, putting Manhattan on pace to exceed 40M SF of activity for the first time since 2019, according to Colliers.
Average asking rents in Manhattan were 1% higher than in July at $74.73 per SF. But they were just $0.17 higher year-over-year, and the average is still 6% below where it was in March 2020 at $79.47 per SF.
Asking rents are still low because of the hit they took during the pandemic, when space was repriced at a lower rate at the same time as nontrophy and sublease space returned to the market in high volumes, Colliers Executive Managing Director for New York Frank Wallach said.
Tech companies and creative tenants were the driving force behind August’s livelier-than-normal leasing volumes, JLL found, accounting for 29% of all leasing activity in the third quarter.
Another of the largest deals during August was WeWork’s 259K SF expansion at CIM Group’s 1440 Broadway, which was signed to accommodate Amazon’s growth needs, Bloomberg reported last month.
“That’s having a huge influence in Midtown South,” Lim said, highlighting the area from 32nd Street down to just below Union Square where tech companies, big and small, have been signing leases throughout the year.
Landlords signed 2.1M SF of deals in Midtown South in August alone, bringing the area’s availability rate down to 15.1%, Colliers found, while Midtown’s availability was just 13.4% after deals closed for 1.3M SF of leases during the month.
The other largest leases during the month were Piper Sandler’s 140K SF lease at Paramount Group’s 1301 Sixth Ave., Cushman & Wakefield’s move to a 134K SF space at Paramount Group’s 31 W. 52nd St. and pet food company The Farmer’s Dog’s 58K SF lease at 568 Broadway, which is owned by a partnership between Aurora Capital Associates, A&H Acquisitions and Allied Partners.
Downtown Manhattan still trails Midtown and Midtown South, accounting for just 191K SF of the leases in August — roughly 5% of Manhattan’s total. Availability is still well above the citywide average at 18.5%, the same number as July and 1.6% lower than a year earlier.
The declining availability and office foot traffic returning to prepandemic levels for the first time have given developers confidence to follow Related’s lead and launch new towers.
Among them are BXP’s 343 Madison Ave., a $2B office development that kicked off construction in late July and is set to rise 46 stories when it delivers in 2029. Just this week, SL Green struck a deal to buy the former Brooks Brothers’ flagship store at 346 Madison Ave. and redevelop it with an 800K SF office tower. Extell is also pushing forward on a 1.1M SF office tower at 570 Fifth Ave., Lim said.
There’s also excitement over new developments on Park Avenue. Park Avenue availability hit 8.2% at the end of last year, its lowest level since 2018, per Avison Young.
RXR and TF Cornerstone are seeking tenants and financing to kick off construction of a new supertall at 175 Park Ave. There’s also 460 Park Ave., which received backing from the city this year for a $200M revitalization program.
“There are occupiers who are at every different kind of timeline, looking at the market,” Lim said. “If they are more Park Avenue-focused, they’re looking even five years ahead.”